New York AG to investigate online music price fixing

New York State Attorney General Eliot Spitzer is launching an investigation …

It wasn't a question of if, only a question of when. New York State Attorney General Eliot Spitzer is launching an investigation into price fixing for online music sales. The Attorney General's office has issued subpoenas to Warner, Sony BMG, and Vivendi Universal, and possibly other music giants in order to begin to investigate possible collusion among music industry titans on pricing.

The music industry and Apple Computer have been trading public barbs over the past year about the price of music. Steve Jobs is credited with getting the industry onboard with a 99 cent-per-song pricing schema (lower prices do exist, however), but the swift success of Apple's iTunes Music Store quickly caused problems. The music industry, which appears not to have anticipated the success of online music sales, started complaining about "low pricing" within months, and in the second half of this year the record labels have turned up the heat. Steve Jobs fired back calling the industry "greedy," and insinuated that the music executives were short-sighted, because price hikes would likely send people back to piracy.

Within days of Jobs' comments, Warner Music Group CEO Edgar Bronfman, Jr. ripped into Apple, suggesting that it was unfair for the company to talk about the price of music when they're making their own money off of the iPod—a revenue stream of which the music industry doesn't get a piece. "We are the arms supplier in the device wars between Samsung, Sony, Apple, and others," he said. The industry pushed on, and by last month is seemed to be a foregone conclusion that prices would soon be rising.

The music industry paints the price hikes as a win-win for everyone, because they say that they are only interested in raising the prices of new hit songs. The flipside, they claim, is that this will enable them to reduce the cost of older songs. Yet there is no shortage of suspicion that the industry's promises are empty. Aside from general concern over what the industry would deign to be "old" (Perry Como versus 1980s U2, for instance), there is not much love for the music giants, as they have already been busted on price fixing in retail stores, and have even been caught illegally promoting music on the radio. For an industry that talks so much about morality, they have a lot of dirt on their faces. Now we'll see what New York State Attorney General Eliot Spitzer turns up.

Ken Fisher / Ken is the founder & Editor-in-Chief of Ars Technica. A veteran of the IT industry and a scholar of antiquity, Ken studies the emergence of intellectual property regimes and their effects on culture and innovation.